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Cash Tightness May Depress China Iron Ore Swaps Trading

China’s first iron ore and thermal coal swap contracts will be launched on Aug. 4, Shanghai Clearing House said, following the launch of iron ore futures contract by Dalian Commodity Exchange last October.  

The two swap contracts will be priced in Chinese yuan and will be traded over the counter, enabling traders to open or close positions promptly. 

The iron ore swaps contract, based on ore with 62 percent content, will be priced against indices published by CUSteel, China Beijing International Mining Exchange and Mysteel.  
The contract, to be traded in a lot size of 100 tonnes, should allow small players to participate in the trading. However, current liquidity conditions and sluggish iron ore market may dampen iron ore swap trading at its early stage.
To attract more participants, the commission for bank and exchange will not be charged in the first two months, but that for broker will be charged. The followings in table below show the comparison of iron ore swaps contract in Shanghai Clearing House and Singapore Exchange. 

Iron Ore Swaps

Shanghai Clearing House

Singapore Swap Exchange

Priced in




100 wt

500 wt


6000 yuan/lot
(60 yuan/wt)

Initial 3,850 dollar/lot
(47.7 yuan/wt)
Maintenance 3,500 dollar/lot
(43.4 yuan/wt)

Total Commission

0.4-0.6 yuan/wt

0.91 yuan/wt

Commission for Bank & Exchange

0.2-0.3 yuan/wt

25 dollar/lot (0.31 yuan/wt)

Commission for Broker

0.2-0.3 yuan/wt

0.1 dollar/wt (0.60 yuan/wt)



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